The Leadership Premium: How companies win the confidence of investors

Taking stock of leadership

Market perceptions of leaders move share prices and The Leadership Premium reveals just how much. The report puts a hard metric on the “intangible asset” of leadership, revealing that, in some sectors, good leaders can account for more than one-fifth of equity value. The report also details the core capabilities analysts look for and how they “test” the quality of leadership.

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More than 50 percent of stock market analysts routinely factor leadership into their valuations—and 80 percent award a premium for particularly effective senior teams, according to a new Deloitte research paper.

Based on a global study of investment bankers, private equity companies, and financial analysts, the paper, The Leadership Premium: How companies win the confidence of investors, puts a hard metric on the “intangible asset” of leadership, revealing that, in some sectors, good leaders can account for more than one-fifth of equity value.

In interview after interview, analysts told Deloitte that the quality of senior leadership helped decide the long-term potential of a stock. The gap between the value of an effectively-led and ineffectively-led company could, says the paper, be as much as 35.5 percent.

So how do analysts judge leaders—and how can companies bridge that gap?

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